The Amazon Elastic Computer Cloud is no longer just about Linux–you can run Windows too.

This is classic strategy because they’re making it tremendously easier for customers to pick one cloud computing and not have to choose.  As Stacey Higginbotham points out, this also eliminates a competitive advantage some other players had.  Aside from these smaller players, it also raises the bar on Microsoft themselves in terms of getting into Cloud Computing. 

There is the pesky issue of that it will be more expensive to run Windows due to the Microsoft licensing fees versus Open Souce Linux, but even that will benefit from greater free market exposure to competition.  I doubt Amazon will eat the cost (one option Stacey suggests), but it gives Microsoft the hard choice of discounting to Amazon to keep Windows vigorous on the Cloud Computing front or placing Windows at an unfair disadvantage versus Linux.  The early days really matter when a paradigm shift is underway and Microsoft knows that.

Nick Carr states the case succinctly:

Will Microsoft adopt a true utility pricing model for virtual computers running Windows, allowing Amazon to roll the operating system licensing cost into its hourly fee, or will the Windows licenses have to continue to be purchased separately? If it’s the former, Microsoft will have made a significant step forward into the utility world.

Meanwhile, Carr points out that Microsoft itself is announcing a new Cloud Operating system on the same day.  Here are Ballmer’s remarks to that effect from the London Register:

“The last thing we want is for somebody else to obsolete us; if we’re gonna get obsoleted, we better do it to ourselves.”

The important question in this competitive dogfight that Carr missed is whether Microsoft’s Cloud OS will offer Linux?  Amazon’s move really creates a more level playing field and is one more reminder to Microsoft it can’t afford to be isolationist forever.  It’s a masterful move both in terms of making customers happy and in terms of forcing Microsoft to choose between a set of unatractive options:

– Do we adopt cloud computing pricing on Windows and let Amazon continue into our turf unabated while we make less on each copy of Windows, or do we penalize Windows on Amazon by charging full price and miss out on Amazon’s great momentum in the Cloud?

– Do we make our Cloud OS Windows-only, and leave Amazon the superior platform because its open, or must we support Linux and thereby endorse it?

Related Articles

Amazon Web Services Blog announcement of Windows support.  Good technical detail here.